Starting a brand new business can be exciting and rewarding, but we rarely want to think about the potential dangers our businesses face. Unfortunately, there are people out there who aren’t satisfied with the wages you pay them, and want to “maximize their earnings potential” by defrauding you through theft.
The sad truth is, recent security experts have estimated that as many of 30% of the average company’s employees are already stealing from their employer, and another 60% would steal from their employer if they had the right opportunity and motivation.
Fortunately, there are steps you can take to avoid becoming part of this statistic.
Through careful hiring practices and the right combination of checks and balances, you can reduce both the opportunity and motive to steal from your company. In this article, we’ll outline some of the pitfalls of employee theft, and what you can do to minimize how at risk your business is of the theft and your response to it.
The first step in preventing employee theft is making sure your pre-hire practices help mitigate the risk you are at of the theft in the first place. There are a number of excellent ways you can ensure you are hiring not only the most fit employees for your job offering, but also the employees who are the least likely to steal from you.
Background checks are an important first step, and are a recognized way of hiring reputable employees. Background checks are easy to do nowadays, with multiple services available online to conduct the check for you.
Just about every employer asks for references, but few actually check those references. Don’t be one of those statistics: instead, call your potential new hire’s former employers and ask them if they had a problem with employee theft that might be related to this employee.
You won’t always get a straight answer, for legal liability reasons, but you can at least get a feel for how the employer felt about their employee. If a reference gushes with how lost they feel without that employee, chances are pretty slim that they suspected that person of theft.
These tests are commercially available standardized tests that conduct a psychological evaluation of a potential hire. Many experts believe that these tests can identify potential employees with a propensity to steal, but the other side of the coin is that some people believe these tests are inaccurate and can violate privacy and civil rights.
Tread lightly with this one, but keep it in mind as an option.
The next step in preventing employee theft is during the on-the-job or other employee training program. This is the time when you can make it clear to your new employee what your stance is on employee theft, while also having trusted employees observe the new hire to look for signs of possible future malfeasance on the new hire’s part.
This is pretty simple. Make sure your company’s code of conduct makes it clear what you consider to be theft, and what the penalty is for it. Make sure your employees know that you will prosecute cases of theft, and you can rest assured that the “opportunity” is lessened for many potential thieves.
You should specify exactly what theft includes, but ensure that you include a phrase like “includes but is not limited to,” so you can be able to prosecute other infractions that you might not have considered when you were first drafting your company’s code of conduct.
Have your new hire shadow someone else doing the same type of work, whenever possible. The mentor can then observe the employee, and pick up on clues that the employee might harbor some thoughts about stealing from your company. This is also an excellent time to demonstrate to your new hire what checks and balances you have in place to prevent employee theft from happening in the first place.
You’ve hired your employee, you’ve put them through training, and now they’re doing the job you hired them to do. So far, everything seems on the up and up, so that means they won’t steal from you, right? Sorry, no…that just means that now is the time to make sure you keep an eye on your employees to ensure they remain honest.
Through your regular employment practices, you can maintain visibility over what your employees are doing and make sure they know that even if they have the motivation to steal, the opportunity just is not there for them.
Conducting random audits should be part of your fraud avoidance plan, making sure your employees continue to know where you stand on employee theft and what you will do about it. Random audits also demonstrates that you are watching, so conduct these at will, as it fits in with your business needs.
You can audit everything from employee spending to employee use of office supplies, again depending on what sort of business you are in and how minuscule the infraction you want to detect.
Believe it or not, your employees do not need to have unfettered access to the company treasury. In fact, you should set specific limits on employee spending that define not only how much an employee can spend, but also what an employee can spend in particular categories. This can prevent your employee from doing something like using the company credit card to pay for the gas in their car for the family vacation, or buying airline tickets on the company dime.
Make sure your employees know they are accountable to you for everything they spend their money on, and make sure they know “Big Brother” is watching their spending habits.
For example, instead of having employees book their own travel for business needs, avoid the temptation they might have to book a family vacation on the corporate spending account by using a travel agency that reports all travel activity to the financial officer.
This might cost a bit more in overall expenses, but can save your company countless thousands of dollars in fraudulent travel expenses. This is just one example of the type of oversight you should include in your regular business operating procedures: use your imagination to come up with others!
Well, there we go. A quick and simple way of some of the most tried and true methods to prevent employee theft.
While employee theft is so prevalent today, there are definite ways to avoid your risk of being hurt by this fraudulent activity, starting from the day before you hire that new employee and extending all the way through the employee’s years of honest service to your company.
If you do suspect employee theft, make sure you take the right steps: conduct an investigation to determine if actual theft occurred, figure out the amount of the theft, and see if you can identify specifically which employee is guilty of theft. Then, and only then, bring in law enforcement to prosecute the theft and take preventative measures to stop the theft from happening again.
If you follow these tips, you can rest assured knowing that you have a plan in place for preventing and dealing with employee theft without putting yourself at risk for civil lawsuits related to wrongful prosecution. Using common sense and creating a solid plan of action for your overall business, you can avoid the pitfalls of employee theft, keeping your employees honest and keeping your bottom line healthy.
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